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NZ Dollar Eases As Greenback Revives

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 2 NZPA - The New Zealand dollar fell around a third of a cent overnight as the US dollar staged a recovery based on easing concern about the American economy.

The kiwi gained on the Australian dollar which weakened more steeply against the greenback than the New Zealand currency.

At 8am, the kiwi was buying US77.76c compared with US78.06c at 5pm yesterday. On the Australian cross, it lifted to A83.28c against A83.16c at yesterday's close.

The kiwi also firmed on other major cross rates and the New Zealand dollar trade-weighted index gained a tad to 69.70 from 69.61.

The US dollar climbed to a five-week peak against the euro and a seven-week high versus a major currency basket as data indicated a generally stable economy, suggesting the Federal Reserve's monetary easing could slow.

Investors focused on the positive aspects of the US spending and core inflation data as well as a key manufacturing survey for April and shrugged off higher-than-expected US initial jobless claims.

Wall Street had a positive session with blue chip stocks rising 1.3 percent which analysts believe is generally positive for the New Zealand dollar in the current climate.

Traders expect a quiet session today with much of Europe taking an extended May Day holiday.

The local market is keenly anticipating labour market statistics on Monday which should reveal the extent of wage pressure and inflation pressure, giving an indication of how long the Reserve Bank will keep the screws on interest rates.

Economists polled by Reuters on average forecast salary and ordinary time wages rose 0.8 percent in the March quarter and 3.5 percent from the same quarter a year ago.

They are also forecasting ordinary time average hourly earnings rose 1.2 percent in the quarter and 4.4 percent from a year ago. Any numbers higher than these are likely to see the kiwi bought as traders anticipate interest rates holding up for longer.

NZPA WGT Reuters sml nb

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